TPP threatens the Canadian auto industry

Tuesday, February 2, 2016

This week the federal government plans to sign on to the Trans-Pacific Partnership (TPP), after which Canada will be locked into a two-year countdown to ratify the deal, despite the controversy surrounding it.

Last week, Canadian Labour Congress President, Hassan Yussuff, and several other Canadian union leaders met with Trade Minister Chrystia Freeland to express serious concerns about the deal.

“We made it clear that Canadians must be fully informed and have their say before there is any talk of ratification,” said Yussuff.

In a subsequent letter to Minister Freeland, Yussuff provided a detailed list of Canadian unions’ concerns with the Trans-Pacific Partnership, including the following major threats:

Corporations get more power to sue; workers remain largely unprotected

Investor-state dispute settlement (ISDS) is a provision in many trade agreements, which allows massive corporations to directly sue democratically-elected governments, in an unaccountable system separate from national courts, in order to protect and expand their profits.

For example, Canada is currently being sued by drug company Eli Lilly for $500 million after our courts refused to extend patents on several of their drugs. 

While corporations are given more rights, workers’ rights remain almost totally unprotected under multinational trade agreements like the TPP. For example:

  • Chapter 12 of the TPP gives corporations the ability to bring employees to Canada en masse, without any requirement that these workers be paid fairly;
  • Employers will be able to transfer skilled trades and technical employees to Canada, with no requirement that they attempt to hire within Canada first;
  • The labour provisions of the TPP have no teeth and provide no guarantees that basic workers’ rights in TPP partner countries will be protected and that workers will be able to exercise their rights to form a union and to engage in collective bargaining.

Since the early 1990s, as international trade agreements have proliferated, work has become more precarious, income inequality has grown, and corporations have found more ways to escape responsibilities to treat workers fairly. The TPP will only make things worse. A simulation by Tufts University using the UN Global Policy Model projects greater income inequality in every TPP country by 2025 as a result of the agreement.

If the goal behind the TPP is to improve our global economy, we need to end the flawed experiment with ISDS. It’s time to rebalance the “investor protection” process and ensure companies’ responsibilities – to treat workers fairly and protect the environment – are emphasized just as much as the protection of their assets.

Massive Job Losses in Automotive Manufacturing 

In 2014, approximately 40,000 Canadians worked in motor vehicle manufacturing and another 70,000 in parts manufacturing. A study by Unifor found the TPP could lead to the loss of 20,000 jobs in the Canadian auto sector alone by:

  • Quickly eliminating any remaining incentive to manufacture vehicles in Canada, favouring imports from Japan; and
  • Increasing the incentive for companies to source auto parts from low-wage non-TPP nations, discouraging engine and transmission manufacturing in North America. 

Canadian dairy farms under threat

Our country’s supply management system ensures Canadians have access to high-quality, locally-produced food while supporting small family farms and rural communities. Unfortunately, Canada’s has been importing more and more dairy since 2006. The TPP will give foreign dairy producers an even bigger share of our dairy market. 250 million liters of milk, and the production jobs that come from that, are at risk annually.

While dairy farm owners (but not workers) have been promised a 15-year compensation package, it’s clear the TPP will only hasten the decline of Canada’s dairy industry.

Lower Food Safety Standards

The TPP makes it harder for the Canadian government to introduce new or maintain existing regulations such as safety standards, even when they are in the public’s interest. 

For example, Canada’s food safety system currently bans the sale of products containing bovine growth hormone. Under the TPP, our ban on bovine growth hormone, and other regulations designed to protect consumers, could be challenged as a “trade barrier.”

Higher Prescription Drug Costs

Canada already has the second-highest per capita drug costs in the world. The TPP gives even more monopoly patent protection to drug companies than they currently have, meaning it will take longer for Canadians to access cheaper, generic versions of drugs. The TPP’s concessions to drug companies could see Canadians pay over $800 million annually in increased drug costs.

In addition, the TPP:

  • Locks Canada into its current level of privatization and commercialization, preventing public innovation, such as the introduction of a universal, national, public pharmacare program; and
  • Gives large drug companies even more power to sue our governments if their patented drugs are excluded from government pharmacare plans.

Companies could prevent countries from fighting climate change

By virtue of the TPP and previous trade agreements such as the Comprehensive Economic and Trade Agreement (CETA), government can no longer attach conditions to procurement contracts to foster local economic development or ensure environmental standards. Therefore, governments may be restricted from demanding local hiring, the purchase of local products or requiring workers to be paid industry wages.

This restriction will likely mean that governments will not be able to maximize the job spinoff of large infrastructure projects, such as those that are expected in the fight against climate change. For example, the TPP would prevent a government from requiring local sourcing in order to foster green industry. 

With ISDS, corporations will also be able to challenge the regulations required to fight climate change if they deem them to be unreasonable or unfair obstacles to carry on their business activities. As a result, the TPP will put a chill on governments taking the steps necessary to fight climate change. Without governments taking a strong role, we will not be able to transition to a low-carbon economy in time to avert climate catastrophe.

When the Harper government began negotiating the Trans-Pacific Partnership, they did not take the time to perform any kind of economic or environmental analysis. While major concerns like the above have been raised, no convincing case has been made for why Canadians would benefit from the TPP.

To read the full text of the letter to Trade Minister Freeland, click here.